And It’s Happening

DRM-free tracks from EMI will be offered at higher quality 256 kbps AAC encoding, resulting in audio quality indistinguishable from the original recording, for just $1.29 per song. In addition, iTunes customers will be able to easily upgrade their entire library of all previously purchased EMI content to the higher quality DRM-free versions for just 30 cents a song, Apple said.

iTunes will continue to offer its entire catalog, currently over five million songs, in the same versions as today — 128 kbps AAC encoding with DRM — at the same price of 99 cents per song, alongside DRM-free higher quality versions when available.

With this model, Apple avoids customer confusion by continuing to offer what is now cheaper and lower quality downloads (albeit with DRM) as well as at a higher bitrate. In other words, higher quality for more money, lower quality for less money. Easy to break down and easy to understand.

Note:From the same AppleInsider article mentioned above:

All EMI music videos will also be available in DRM-free format with no change in price.